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Good Vibes, Positive Energy - Energy ETF Universe Research Thread

Today’s ETF universe is Energy. The universe constituents are available on GitHub, and we’ll be posting links to fundamental research below. Two ETFs operate in clean and solar energy, but the vast majority of the universe’s market capitalization is either oil and natural gas commodities contracts or involved in the production of oil and natural gas. There are short products through ERY, UCO, and DGAZ.

Energy companies typically fall into three categories: upstream, midstream, and downstream. Upstream companies are primarily concerned with the discovery and extraction of natural resources. Midstream companies store resources and transport them to downstream companies, which refine, market, and sell to end-users. The ETFs generally reflect splits along these lines, with an additional sector called “Equipment & Services” that exists mostly to support upstream and midstream businesses and has less exposure to the spot price of oil or gas.

Ultimately, the supply of and demand for the resources that these companies generate will determine the price of the underlying commodities. However, other factors like government stockpiling, political uncertainty, and artificial control by the Organization of Petroleum Exporting Countries (OPEC) will have an impact as well. The complexity of energy’s value chain is part of what makes it uncorrelated to US markets.

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The material on this website is provided for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation or endorsement for any security or strategy, nor does it constitute an offer to provide investment advisory services by QuantConnect. In addition, the material offers no opinion with respect to the suitability of any security or specific investment. QuantConnect makes no guarantees as to the accuracy or completeness of the views expressed in the website. The views are subject to change, and may have become unreliable for various reasons, including changes in market conditions or economic circumstances. All investments involve risk, including loss of principal. You should consult with an investment professional before making any investment decisions.



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The material on this website is provided for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation or endorsement for any security or strategy, nor does it constitute an offer to provide investment advisory services by QuantConnect. In addition, the material offers no opinion with respect to the suitability of any security or specific investment. QuantConnect makes no guarantees as to the accuracy or completeness of the views expressed in the website. The views are subject to change, and may have become unreliable for various reasons, including changes in market conditions or economic circumstances. All investments involve risk, including loss of principal. You should consult with an investment professional before making any investment decisions.


Crude Oil: USO, BNO, UCO, SCO (short):

Natural Gas: UNG, UGAZ, DGAZ (short):

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The material on this website is provided for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation or endorsement for any security or strategy, nor does it constitute an offer to provide investment advisory services by QuantConnect. In addition, the material offers no opinion with respect to the suitability of any security or specific investment. QuantConnect makes no guarantees as to the accuracy or completeness of the views expressed in the website. The views are subject to change, and may have become unreliable for various reasons, including changes in market conditions or economic circumstances. All investments involve risk, including loss of principal. You should consult with an investment professional before making any investment decisions.


S&P Energy Companies: XLE, IYE, VDE, XOP, ERX, ERY (short):

  • XLE, IYE, VDE, ERX, and ERY all have very similar constituents with Exxon and Chevron constituting approximately 40% of each. If you can predict the movements of XOM or CVX, you can predict the movements of the ETFs.
  • Speculation on the price of the commodities can affect the price of the companies that produce them.
  • Demand for heating, cooling, and light changes not only with the seasons, but also with the economy and efficiency measures.
  • Weather forecasts have major impacts on energy spot prices and short term futures contracts.
  • Government regulation from bodies like FERC can have an impact on the supply of oil and natural gas.
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The material on this website is provided for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation or endorsement for any security or strategy, nor does it constitute an offer to provide investment advisory services by QuantConnect. In addition, the material offers no opinion with respect to the suitability of any security or specific investment. QuantConnect makes no guarantees as to the accuracy or completeness of the views expressed in the website. The views are subject to change, and may have become unreliable for various reasons, including changes in market conditions or economic circumstances. All investments involve risk, including loss of principal. You should consult with an investment professional before making any investment decisions.


Clean energy: ICLN, TAN (solar):

Energy Midstream: AMJAMLP

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The material on this website is provided for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation or endorsement for any security or strategy, nor does it constitute an offer to provide investment advisory services by QuantConnect. In addition, the material offers no opinion with respect to the suitability of any security or specific investment. QuantConnect makes no guarantees as to the accuracy or completeness of the views expressed in the website. The views are subject to change, and may have become unreliable for various reasons, including changes in market conditions or economic circumstances. All investments involve risk, including loss of principal. You should consult with an investment professional before making any investment decisions.


Equipment & Services: XES, OIS

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The material on this website is provided for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation or endorsement for any security or strategy, nor does it constitute an offer to provide investment advisory services by QuantConnect. In addition, the material offers no opinion with respect to the suitability of any security or specific investment. QuantConnect makes no guarantees as to the accuracy or completeness of the views expressed in the website. The views are subject to change, and may have become unreliable for various reasons, including changes in market conditions or economic circumstances. All investments involve risk, including loss of principal. You should consult with an investment professional before making any investment decisions.


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The material on this website is provided for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation or endorsement for any security or strategy, nor does it constitute an offer to provide investment advisory services by QuantConnect. In addition, the material offers no opinion with respect to the suitability of any security or specific investment. QuantConnect makes no guarantees as to the accuracy or completeness of the views expressed in the website. The views are subject to change, and may have become unreliable for various reasons, including changes in market conditions or economic circumstances. All investments involve risk, including loss of principal. You should consult with an investment professional before making any investment decisions.


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